The topic of drug safety has received great attention in recent years. Pharmacoepidemiology is the study of the use and effects of medicines in large populations using epidemiological methods. Pharmacoepidemiologic research can fill the knowledge gaps due to the limitations of existing pharmacovigilance systems that rely on randomised controlled trials and voluntary reporting. This review discusses the present state of pharmacoepidemiologic research in Australia. In Australia, linking administrative data on use of medications and medical services is possible to a certain extent. Data from patient registries with respect to rheumatology are also available. These data are valuable for better understanding of the beneficial and adverse effects of medicines. Opportunities and challenges of using these data sources to address issues from clinical pharmacology are also highlighted. Australia is well-placed internationally to make major contributions to the knowledge base of outcomes of medicines in the real-world setting. Developments in pharmacoepidemiology are critical to clinicians treating patients with rheumatic and other conditions.